EDITORS' CORNER
In a sign that many universities continue to face pressure to make ends meet, nearly 200 private colleges borrowed from restricted endowments in 2025, The Wall Street Journal recently reported.
Five years ago, that number was 131, the Journal reported, citing figures from higher-education financial consultant Perspective Data Science, which told the newspaper that the schools used most of the money for everyday expenses.
But restricted endowments are donations made with strings attached — meaning the donor or nonprofit or group that gave the money did so with instructions on how it should be spent.
“The percentage of private, nonprofit colleges drawing down endowments at greater than 7%—considered a sign of financial instability—nearly doubled to 19.3% in 2025 from 9.7% in 2016,” the Journal reported. “…Using restricted donor funds to cover day-to-day expenses is tantamount to putting a going-out-of-business sign on campus, so it is little discussed outside college boardrooms.”
The spending on restricted endowments is just another example of the struggles many colleges face today. While elite universities and flagship universities remain financially healthy, regional public universities and non-selective private colleges are grappling with a new era in higher education.
Tuition prices rose faster than inflation for decades, causing students to question their return on investment as they become saddled with debt. Enrollments also trended down due to fewer couples having children. More recently, the advent of AI has caused a disruption in the job market and higher ed business model.
Left-wing indoctrination is also widely recognized as another big factor in the declining confidence in higher education, which led to enrollment drops in favor of other options, such as trade schools, vocational schools, the military, community college, and entrepreneurship efforts.
As The College Fix previously reported, at least 16 colleges closed in 2025, 28 closed in 2024, and 14 closed in 2023; dozens more have merged to stay alive.
A report this May from the Huron Consulting Group found that nearly one in four private, nonprofit colleges and universities in the U.S. could close due to financial problems within the next decade.
Nearly 20 Christian colleges shut down or merged since 2020 as they faced the pressure of declining enrollment and increasing costs, The Fix reported in 2023.
Public universities also face heat.
This year, Portland State University cut two academic departments and laid off staff, and the University of Nebraska-Lincoln terminated dozens and eliminated four programs, two examples among dozens of public state schools in recent years to find ways to cut corners by downsizing and streamlining.
MORE: Declining enrollment forces PSU to slash two departments, lay off staffers amid $35M budget crunch
